Hermes intl: With even stronger growth than LVMH and Kering, Hermès seduces the stock market

(BFM Bourse) – Hermès continues to outperform a very dynamic sector, posting impressive organic growth and outrageous margins of more than 40% in the first half of 2022. The market applauds, pushing the luxury giant’s stock to higher year-to-date highs.

The sales growth of the saddler Faubourg Saint-Honoré far exceeded analysts’ expectations in the first half of the year, even if activities in China have been slowed down in recent months by the return of lockdown, especially in Shanghai.

In the first half of 2022, Hermès International sales far exceeded expectations at 5.475 billion euros, up 29% compared to the first half of 2021. The group performs slightly better than the consensus, which expected half-year revenues of 5.3 billion euros . At constant exchange rates, sales growth was 23%.

After LVMH (+16% in organic) then Kering (+21%) had already convinced the market in the days before, the saddler also exceeded market expectations, which expected half-year sales of 5.3 billion euros.

A record margin

Current operating profit rose 34% to €2.3 billion compared to €1.72 billion in H1 2021, a “record” margin of 42.1%. The group’s half-year net profit reached 1.64 billion euros in the first half, which corresponds to an increase of 39.7% over a year.

“The good momentum of the results of the first half testifies to the growth of our 16 companies and the strong desirability of our properties, designed by artisans following a sustainable approach without compromising on quality. In a context that is still unstable, we move forward faithful to our responsible and committed business model towards our employees and our partners,” welcomed Hermès manager Axel Dumas, quoted in the press release.

This stratospheric performance also boosts the Hermès International title by 7.7% to 1336 euros around 11:00 a.m. – the promotion is one of the most expensive on the French coast.

Very “strong performance” in all regions

In the first half of 2022 all regions had very solid performances with Asia holding up well despite the health context in China. Sales in the Group’s stores (+23%) benefited from the strengthening of the exclusive omnichannel network and online sales. The growth in wholesale (+25%) resulted in particular from the recovery in sales to travelers.

Asia ex Japan (+15%) was driven by strong momentum across the region, particularly continued activity in Singapore, Australia and Korea. Greater China rebounded strongly in June after suffering health restrictions and store closures in April and May, particularly in Shanghai and Beijing. Following the reopening of the renovated Pacific Place stores in Hong Kong and One Central in Macau earlier this year, a new store was successfully inaugurated in Zhengzhou, Henan Province, China at the end of March.

Japan (+20%) showed a remarkable performance based on the loyalty of local customers. Zone America (+34%) continued to enjoy very good momentum at the end of June. In the United States, a new store opened in Austin in April, the House’s third store in Texas.

Europe excluding France (+34%) and France (+41%) continued their solid growth, thanks to the loyalty of local customers and the recovery in tourist flows, particularly in France, the UK and Italy.

A loyal clientele

At the end of June 2022, all business areas confirmed their growth. According to Hermès, the growth in leather goods & saddlery (+12%) was based on sustained demand and the increase in production capacity in line with the annual target. The clothing and accessories division (+36%) continued its good momentum, driven by the success of the ready-to-wear collections, fashion accessories and footwear. The other Hermès businesses (+33%) continued their strong momentum thanks to the home universe and jewellery.

As it should be, the saddler does not reveal any quantified prospects. For 2022, it is still “difficult” for the group to estimate the effects of the health context. “The highly integrated artisanal model, the balanced distribution network, the creativity of the collections and the loyalty of the customers make us look to the future with confidence,” adds Hermès.

In the medium term, despite the economic, geopolitical and monetary uncertainties in the world, the group confirms an “ambitious” target of sales growth at constant exchange rates.

Sabrina Sadgui – ©2022 BFM Stock Exchange